With pressure mounting on media mogul Sumner Redstone to dig his way out of his own credit crisis, the billionaire's privately held firm, National Amusements Inc., was scrambling Friday to renegotiate a $1.6-billion bank loan.
The company faces a deadline to repay half the amount, $800 million, by mid-December. National Amusements said Friday that a committee of its board, including Redstone's daughter, Shari Redstone, was holding discussions with the company's bankers.
For The Record
Los Angeles Times Wednesday, October 22, 2008 Home Edition Main News Part A Page 2 National Desk 1 inches; 44 words Type of Material: Correction
Sumner Redstone's debt: An article in Business on Saturday about the renegotiating of a $1.6-billion bank loan by Sumner Redstone's National Amusements Inc. described Corporate Library as "a nonprofit group that advocates for transparent corporate practices." It is a for-profit corporate governance research firm.
If Redstone is unable to refinance his debt, some analysts say he might be forced to sell more shares of Viacom Inc. and CBS Corp., the prized media giants controlled by the family-owned holding company and media chain, something he would be loath to do.
A week ago, caught in an unforeseen credit jam, the 85-year-old entrepreneur was forced to sell at bargain-basement prices $233 million worth of nonvoting shares of CBS and Viacom. The sell-off was required to raise cash to satisfy National Amusements' loan covenants, which were violated when shares of Viacom and CBS dipped below levels stipulated in the loan agreements.
The situation is precarious for Redstone because much of his wealth is tied up in National Amusements, which, in addition to CBS and Viacom, controls video game maker Midway Games Inc. and the family's 1,500-screen theater chain.
"National Amusements needs to refinance or restructure $1.6 billion of gross debt soon," Pali Research analyst Richard Greenfield wrote Friday in a report. "Time is clearly of the essence."
Redstone's business problems come at a time when he also is embroiled in personal difficulties. He has been telling friends he is separating from his wife of five years, Paula Fortunato. Although the marriage has previously been the subject of speculation, people close to the couple say that this time the trouble appears to be more serious. A spokesman for Redstone declined to comment. Paula Redstone did not respond to an inquiry.
Redstone has also been feuding with daughter Shari for more than a year over a range of business issues, including succession at his media empire. The conflict spilled into the open again this week when Shari Redstone disputed a press report that National Amusements' debt problems were largely attributable to her theater expansion program.
